Traps in Mortgage Lenders Insurance

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From: Andrew Scott


Once you go past that magic 80% LVR with most lenders is when the lender's loan criteria become easier to meet than the insurance company's criteria. However, trying to find out what the criteria are for mortgage lenders insurance is very hard - sometimes the lenders themselves don't know, and there is no booklet listing them.

I have realised that the following are no-go's with respect to getting mortgage lenders insurance.

<UL><LI>Flats above shops</LI><LI>Flats smaller than 50 sq m in area</LI><LI>Serviced apartments</LI></UL>

Do different providers of the insurance have different criteria? Are there other blockers that I haven't listed here?

I'd appreciate help knowing what the ground rules are. Rolf.. I'm sure you can advise here! :)

Andrew Scott
 
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Reply: 1
From: Jas


> I have realised that the following are no-go's with respect to getting
> mortgage lenders insurance.
>
> <UL><LI>Flats above shops</LI><LI>Flats smaller than 50 sq m in
> area</LI><LI>Serviced apartments</LI></UL>

Like everything in life, these rules are adjustable. I've just settled
on a unit less than 50sqm, and got MI. Had to go to two insurers to get
it, otherwise no problem

Cheers,
Jas
 
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Reply: 2
From: Rolf Latham


Hi Andrew

There are a number of rules to LMI, one of them is the security type.

Youve Got most of it covered.

As a generalisation it would be fair to say the following are difficult to get LMI for:

Your list +
Anything with declared commercial use, even if zoned residential, like a house used for myltiple professional rooms (can be got around though)

Anything larger than 25 acres

Anything in a town of less tha 5000 down to 500 people

Properties that are used for primary production where the borrower makes $ from the security property

Non strata title unit blocks

Industrial Property

Converted Motel Units

Timeshare

Units less than 40 to 60 sqm

Mobile homes

Lines of credit secured by properties in "mining towns" Kal, Mt Isa, Broken Hill etc


And so forth, almost a mine field yes.


ta

ROlf

Rolf
 
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Reply: 2.1
From: Mojo Jojo


I've just found that residential warehouse conversions also take abit of extra work when it comes to MLI, especially if they're still in a multi-zone area.
 
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